Twiga Cement set aside US$100m for investment

Twiga Cement set aside US$100m for investment
Published: 27 July 2006

Tanzania Portland Cement Company Limited (TPCC), says it has set aside US$100m as capital investments in the next three years to keep abreast with rising cement demand, and warned it might not declare dividends during the investment period as the projects would be financed from internally
generated funds.

Its Chairman, Jean-Marc Junon, said trending construction boom in the country has given the public entity the jolt to make further investments in capacity, less than two years after spending US$25.9m in phased plant rehabilitation from 2001 to 2004.

’With the development of the cement demand, which is foreseen, TPCC plans to increase its capacity substantially. From mid 2006 till 2009 it expects to invest around US$100m in such expansion.

’With this new investment, TPCC will strengthen its position as the leading cement company in Tanzania.

It will also secure the company’s ability to cover further domestic growth for many years to come,’ Junon said.

The money would be used to acquire the latest production equipment, which will give the company the muscle to compete domestically, and to make inroads into external markets, Junon also said.

At optimality, TPCC (using Twiga Cement as its brand name), which has a domestic market share of approximately 41 per cent, produces at an average output rate of 1400tpd of clinker.

On aggregate, TPCC and its two competitors -- Tanga Cement and Mbeya Cement -- have a production capacity of about 1.2Mta.

Production levels in the country have been rising steadily since 2004 from 1.22Mt to about 1.39Mt last year, but this year demand is expected to outstrip the installed clinker capacity due to the boom in construction activity.

The company also says its market is still confined to Tanzania due to severe infrastructure bottlenecks, which are not only affecting its cost margins and limiting its export ability, but are also placing it at the risk of being crowded out by low cost producers in the region.

Even with strong growth that has taken place, the average cement consumption per capital is on the lower side compared to other African countries, he said.

Some of the selected examples show that the cement consumption in South Africa stands at 250kg, Ghana 110 and Kenya 45kg while Tanzania stands at 35kg per capita.

The company is jointly owned by Scancem International ANS, which controls 69.3 per cent, the government with 30 per cent equity and TPCC employees who own 0.7 per cent of the shares through their Savings and Credit Cooperative Society.